The Pound Australian Dollar (GBP/AUD) firmed over the past seven days. The pairing saw some volatility last week after the Bank of England’s (BoE) interest rate decision and UK GDP figures.
What’s Been Happening: Pound’s Gains Limited by Dovish BoE Bailey Comments
A national holiday in the UK and Australia left the GBP/AUD exchange rate vulnerable to losses at the beginning of the week.
The opening of Tuesday’s European session saw the Pound (GBP) recoup its losses after strong retail sales figures from the British Retail Consortium (BRC). The data lent strength to the pairing.
Additionally, weaker Chinese trade data weighed on the Australian Dollar (AUD).
The exchange rate initially rose on Thursday. Cooler-than-expected Chinese inflation data overnight pulled AUD lower which supported the pair’s gains.
Additionally, GBP made strong gains in the immediate aftermath of the BoE’s interest rate decision. The central bank hiked rates by 25bps and left the door open for further increases.
However, dovish comments from BoE Governor Andrew Bailey following the decision saw the Pound tumble.
GBP/AUD managed to regain its positive momentum on Friday despite mixed UK GDP figures. The UK economy grew by 0.1% in the first quarter of 2023, although saw a surprise 0.3% contraction in March.
At the same time, a risk-off mood saw the Australian Dollar tumble at the end of the week.
Weekly highlights
- UK Employment Data
Tuesday’s jobs report is expected to report unemployment held at 3.8% in March while wage growth accelerated. Could ongoing strengthen in the UK job market push GBP higher?
- RBA Meeting Minutes
Following the Reserve Central Bank’s (RBA) shock 25bps rate hike, will any hawkish signals in May’s minutes boost AUD?
- Australian Jobs Figures
With unemployment in April expected to print unchanged at 3.5%, will signs of a still-tight labour market prompt fresh RBA bets and lift AUD?
GBP/AUD Forecast
Upbeat Chinese private sector data could lift the ‘Aussie’ on Tuesday if it prints as forecast. Any further dovish signals from BoE Governor Andrew Bailey in his speech could dent confidence in GBP on Wednesday.